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Glossary of IB Economics Terms

To excel in IB Economics, students need to have a good understanding of Economics Terminology. This is can be rather daunting for most students. In this page, we created a glossary of IB Economics terms to help students search for Economics definitions in just a few clicks. We hope you will find this tool useful.

Policies aimed at influencing the level of aggregate demand in order to affect growth, employment and inflation. They include fiscal and monetary policy.

Demerit goods

Consumption of such goods creates very significant negative externalities on society so governments try to decrease or prohibit their consumption. Typical examples include alcohol, tobacco and illegal drugs.

Depreciation (of a currency)

A decrease in the exchange rate within a floating (flexible) exchange rate system.

Devaluation (of a currency)

A decrease in the exchange rate within a fixed exchange rate system.

Differentiated products

Products which are similar but not identical across sellers in an industry. They are considered by consumers as close but not perfect substitutes.

Direct Tax

taxes (paid to the government) on income (households and firms)

Dynamic Efficiency

When a firm enjoys economies of scale, leading to faster rates of innovation (new products and new processes).